NIC MAP Vision clients, with access to NIC MAP^® data, attended a webinar in mid-October on key seniors housing data trends during the third quarter of 2022. Findings were presented by the NIC Analytics research team. Key takeaways included the following:

Takeaway #1: Seniors Housing Occupancy Rose a Full Percentage Point in 3Q 2022

• The occupancy rate for seniors housing—where seniors housing is defined as the combination of the majority independent living and assisted living property types—rose 1.0 full percentage point to 82.2% from the second quarter of 2022 to the third quarter of 2022 for the 31 NIC MAP Primary Markets. This marked the sixth consecutive quarter where occupancy did not decline. At 82.2%, occupancy was 4.3 percentage point above its pandemic-related low of 77.9% recorded in the second quarter of 2021 but was still 5.0 percentage points below its pre-pandemic level of 87.2% of the first quarter of 2020.
• Demand as measured by the change in occupied inventory or net absorption was very strong in the third quarter, increasing by 8,719 units in the Primary Markets. This was the strongest demand ever recorded by NIC MAP Vision except for the post-pandemic boost in demand seen in the third quarter of 2021 (11,922 units). 
• Since the recovery began in second quarter 2021, 43,319 units of the 45,707 units placed back on the market have been re-occupied, or 95% of those units.

Takeaway #2: Occupied Units for Assisted Living Hit All-time High

• It’s notable that the total number of occupied units reached a new high in the third quarter for Assisted Living, rising to 268,787 units. This was more than 1,600 units higher than the pre-pandemic first quarter 2020 level.
• This was not the case for Independent Living, where more than 4,000 units need to be occupied on a net basis to reach pre-pandemic occupied unit counts.
• This speaks to the value proposition of Assisted Living and its appeal to families that need the services and amenities offered to older adults. That said, the socialization aspect of Independent Living is attracting new residents after the long-extended pandemic related period of isolation for so many older adults.

Takeaway #3: Occupancy Recovery Well Underway, but More Room to Go

• The graph below helps to provide perspective on the pace of recovery to date for each property type and how far they must go to get back to pre-pandemic 1Q 2020 occupancy levels.
• For Senior Housing, occupancy had fallen 9.3 percentage points from its peak of 87.2% in the first quarter of 2020 to its nadir of 77.9% in the second quarter of 2021 and has since recovered 4.3 percentage points to reach 82.2% in the third quarter of this year. This means that another 5.0 percentage points of occupancy must be recovered.
• The strongest recovery to date has been Assisted Living. Overall, occupancy is up 5.6 percentage points from its low point of 81.6%, but it remains 4.9 percentage points below its Q1 2020 pre-pandemic level of 84.6%.
• At 84.7% in the third quarter of 2022, Independent Living occupancy was 3.0 percentage points above its low point, but remained 4.9 percentage points below its pre-pandemic peak, the same as for Assisted Living.
• And lastly, Nursing Care occupancy fell a very large 12.6 percentage points and has thus far recovered 5.3 pp of occupancy, but it remains furthest behind its pre-pandemic occupancy at 79.3%, with a 7.3 percentage point gap.

Takeaway #4: Construction Activity Still Slow in Most Markets

• The heat map below shows which metropolitan markets are experiencing the most construction activity. The generally blue tones on the right side of the chart indicate that construction activity is relatively “cool” in many markets.
• Looking at the right-hand part of the grid, those markets that are shaded brighter red are seeing the most construction as a share of inventory. This includes Miami, Portland, San Jose where construction as a share of inventory amounted to 11.0% in the third quarter.
• At the other end of the spectrum are markets where there is very little construction underway; this includes Pittsburgh, San Antonio, San Francisco, all less than 1%.
• For perspective, for senior housing, this equals 5.0% of inventory for the Primary Markets and it peaked at 7.3% in late 2019.

Takeaway #5: Transaction Volumes Weak Through the Third Quarter

• Total transaction volumes equaled $5.9 billion through the third quarter of 2022. In the third quarter alone, there were $1.1 billion of deals closed. If the third quarter figure were to hold, volume would be down 63% from the much stronger showing in the second quarter of $3.0 billion and it would be the weakest quarterly volume since the first quarter of 2010! Note that this data does not include deals that have been announced, only closed transactions and it is preliminary data. However, the data and certainly anecdotes, indicate that momentum in the transactions market has slowed sharply.
• Indeed, there is much conversation of buyers becoming more hesitant as the cost of debt increases significantly and therefore changes the investment return expectations and underwriting models, including the price buyers are willing to pay. In addition, there has been much discussion about deal delays as banks become more cautious due to the capital market volatility, rising interest rate markets and uncertainty about pricing.
• In terms of the buyers, the third quarter was again dominated by the private buyers and that has been the case for quite some time, although 2021 did see some public REIT activity.
• Of the $1.1 billion closed in the third quarter, private buyers represented $637 million of that, or 57% of the closed volume in the third quarter. Public buyers represented 20% and institutional buyers accounted for 17%.
• Private capital has been a steady source of capital for many years, especially the private partnerships and family regional owner/operators that have been a steady source of liquidity. However, we are now coming into a different paradigm in terms of the real estate investment markets as interest rates and inflation continue to pressure overall liquidity and it will be interesting to see if private capital continues to dominate over the next few quarters.

Interested in learning more?

• While the full key takeaways presentation is only available to NIC MAP clients with access to NIC MAP data, you can access the abridged version of the 3Q22 Data Release Webinar & Discussion featuring my exclusive commentary below.
• View the Abridged Slides Presentation.

“Increased acuity of residents at move-in is being reported across all care segments, driven by delayed move-ins, but the most cited challenge facing operators – reported by more than 90% of respondents in the Wave 46 survey – is rising operator expenses. Responses to questions on property and professional liability insurance provide additional insight into that sentiment.

Just under one-tenth of respondents reported the degree of staffing shortages across their organization to be severe, representing the lowest share of respondents reporting severe staffing shortages in the time this question has been asked. Though labor challenges persist, this may represent a glimmer of relief to the longstanding staffing crisis. Further, the survey results indicate that rent concessions are being offered at fewer properties now than was the case in earlier parts of 2022.”

–Ryan Brooks, Senior Principal, NIC

This Wave 46 survey includes responses from September 19 to October 16, 2022, from owners and executives of 58 small, medium, and large senior housing and skilled nursing operators across the nation, representing hundreds of buildings and thousands of units across respondents’ portfolios of properties. More detailed reports for each “wave” of the survey and a PDF of the report charts can be found on the NIC COVID-19 Resource Center webpage under Executive Survey Insights.

The trend for rent concessions in the last three waves of the survey which this question was asked is that rent concessions are being offered at fewer properties now than was the case in earlier parts of 2022. Organizations offering rent concessions in all of their properties fell to a mere 7%, down from 21% in Wave 41 and 17% in Wave 37. Comparatively, organizations offering rent concessions in up to 25% of their properties rose to 50%, up from 29% in Wave 41 and 20% in Wave 37.

In the Wave 46 survey, 41% of respondents reported offering rent concessions. This is down from 46% in Wave 41 and 47% in Wave 37. Of organizations who are currently offering rent concessions, the most common forms being offered are free rent for a period of time (37%), rent discounts (24%), unit upgrades (18%), rent freezes (no increases for a specific period of time) (8%), and a reduced entrance free (8%).

In the Wave 46 survey, one-tenth of respondents (9%) report staffing shortages at their organizations to be severe. This is down from one-fifth of respondents in the Wave 42 survey conducted in June 2022 and one-quarter of respondents in the Wave 39 survey conducted in March 2022. Conversely, one-fifth of respondents (19%) report the staffing shortages at their organizations to be minimal, which is up from 9% in Wave 42 and 6% in Wave 39. This represents both the highest share of respondents reporting minimal staffing shortages and the lowest share of respondents reporting severe staffing shortages since March 2022, which marked the beginning of the time frame in which this question has been asked.

While this may represent a promising sign of relief, staffing and labor challenges do persist. Despite fewer reports of severe staffing shortages, attracting community and caregiving staff is the second most cited challenge operators are facing (79%) followed by staff turnover (67%). Having to limit admissions due to staffing shortages was also reported by 24% of operators.

When asked what the staffing shortages at their organization are due to, the most common response was competition from other industries (25%), followed by an inability to hire nurses (21%), competition from staffing agencies (17%), and an inability to fill nurse aide positions (15%).

The most cited challenge facing operators – reported by more than 90% of respondents in the Wave 46 survey – is rising operator expenses and responses to questions on property and professional liability insurance emphasize the sentiment.

When asked to compare the cost of their property insurance currently to pre-pandemic, between 82% and 84% of operators across all care segments – independent living, assisted living, memory care, and nursing care – reported it to have increased (either significantly or slightly). Two-fifths of independent living operators report the change in the cost of their property insurance to have increased significantly, followed by nursing care (38%), assisted living (30%), and memory care (25%).

Professional liability insurance has also increased compared to pre-pandemic. When asked to compare the cost of their professional liability insurance to pre-pandemic, two-thirds (68%) of memory care and assisted living (66%) operators report the change in cost to have either increased significantly or increased slightly, followed by 58% of independent living operators, and one-half (52%) of nursing care operators. No owners or operators reported a decrease in the cost of professional liability insurance.

Market conditions, overall macroeconomic environment, inflation, COVID-19, and insurers dropping out of the market resulting in less competition are all among the reasons cited by respondents for the increase in property and professional liability insurance.

The Wave 46 survey asked respondents whether they found the acuity of new resident move-ins to have increased, decreased, or stayed the same as compared to before the pandemic started. Increased move-in acuity was reported by two-thirds (65%) of assisted living operators, 53% in memory care, 50% in nursing care, and 48% in independent living.

In the Wave 46 survey, reflecting operator experiences in September and the first half of October 2022, the rate of operators reporting an increase in the pace of move-ins in the past 30 days held steady for assisted living properties (43%), memory care properties (46%), and nursing care properties (28%). The rate of independent living operators reporting an increase in the pace of move-ins in the last 30 days rebounded to 43%, compared to 29% in Wave 45.

Most survey respondents reported no change in the pace of move-outs across all care segments within the past 30 days, a consistent theme for the most recent four ESI Waves. In Wave 46, 76% of independent living operators, 67% of assisted living, 76% of memory care, and 76% of nursing care operators reported no change in the pace of their move-outs.

Wave 46 Survey Demographics

• Responses were collected between September 19 and October 16, 2022, from owners and executives of 58 senior housing and skilled nursing operators across the nation.
• Owners/operators with 1 to 10 properties comprise roughly two-thirds (64%) of the sample. Operators with 11 to 25 properties account for 19%, and operators with 26 properties or more make up the rest of the sample with 17%.
• More than half of respondents are exclusively for-profit providers (57%), just over one-third operate not-for-profit seniors housing and care properties (34%), and 5% operate both.
• Many respondents in the sample report operating combinations of property types. Across their entire portfolios of properties, 79% of the organizations operate seniors housing properties (IL, AL, MC), one-fifth (22%) operate nursing care properties, and two-thirds (34%) operate CCRCs – also known as life plan communities.

This is your survey! Owners and C-suite executives of seniors housing and care properties, please help us tell an accurate story about our industry’s performance. While some standard questions will remain for tracking purposes, in each new survey wave, new questions can be added based on respondents’ suggestions. Please let us know what you think.

Wave 47 of the ESI is now live. The current survey is available and takes ten minutes to complete. If you are an owner or C-suite executive of seniors housing and care and have not received an email invitation to take the survey, please contact Ryan Brooks at rbrooks@nic.org to be added to the list of recipients.

NIC wishes to thank survey respondents for their valuable input and continuing support for this effort to provide the broader market with a sense of the evolving landscape as we recover from the pandemic.

The Increasing Importance of Data and Analytics

NIC Co-Founder and Strategic Advisor Robert Kramer has identified “Six Key Drivers” that will shape the senior living industry over the next 10 years. Kramer is also Founder & Fellow at Nexus Insights, a think tank advancing the well-being of older adults through innovative models of housing, community and healthcare. NIC Notes is publishing a series detailing each key driver. View the first four installments of the “Six Key Drivers” blog series. What follows is an analysis of the fifth key driver: The Increasing Importance of Data and Analytics.

Data and analytics are revolutionizing senior living. These critical tools, and the technology that enables them, are vital to manage information and drive better business decisions and resident outcomes. But how?

The use of data and analytics allows us to customize our product to meet the needs and preferences of our customers and other stakeholders. It’s important to note that investments in technology are critical to the future success of both individual companies and our entire industry. Technology will be key in the challenge to stay competitive. Senior living providers need a tech platform to capture data and deploy predictive analytics to create customized solutions. It’s these customized solutions that will drive real value for investors, owners, operators and customers.

I have identified three areas of focus where data and analytics will profoundly impact our industry.

• Data and analytics will drive the delivery of customized healthcare paths for the individual.
• Data and analytics will drive customized business strategies, including the formation of essential partnerships as well as strategic growth plans by market.
• Most importantly, data and analytics will drive a customized resident experience. We will be able to provide a superior product for residents, focused on the personalized experiences that make life worth living. We can turn senior living into what I describe as an “aspirational” setting. It can be a place where people prefer to live regardless of their age, mobility or cognitive condition, instead of a place they hope to avoid.

Let’s take a more detailed look at the three areas where data and analytics will shape the future of senior living.

1. Data enables preventative, predictive and participatory healthcare. As we noted in key driver #4, healthcare is being reframed. We are slowly but surely shifting to a value-based care model that relies on data to produce better results at a lower cost. It starts with prevention and enhanced management of chronic conditions. The data we collect can be analyzed to help prevent and break the typical downward, and costly cycle of sick or injured residents who are sent to the emergency room or hospital, only to return to the community, and bounce back again to the urgent care setting. Data is required to prevent that cycle and avoid the flareup of chronic conditions that leads to acute care. But data alone is not enough. Data coupled with predictive analytics or algorithms can identify potential risks for a particular resident. In short, data and predictive analytics together can provide a healthcare roadmap customized to the individual.
   
   

   A simple example is the burgeoning category of software products that use algorithms to predict when a person is at risk of a fall. We know that falls are one of the most expensive medical events suffered by frail elders that often start a downward health spiral. The CDC estimates that more than $50 billion is spent annually on medical costs related to falls among the elderly. New technology uses algorithms to marry resident data with data from hundreds of thousands of older adults to help spot problems and intervene before a fall takes place. For example, we may determine whether the person has osteoporosis, making a fall potentially more dangerous. We can also analyze the person’s habit patterns and their gait. Are they getting up more times during the night? Is it taking them longer to return to bed? A change may indicate the need for more checks. The result is fewer fall-related visits to the hospital and a better overall experience for the resident and the family.

   
   

   Resident participation is part of the solution. Self-monitoring can provide data to help prevent and predict health problems. For example, the Lively app from Best Buy available on the Apple Watch tracks the wearer’s daily habits. It can send out an alert if the person falls. But instead of wearing a pendant that screams “elderly,” the resident has a smart watch that looks cool. Apple is in a race with other companies to provide the most sophisticated healthcare monitoring and predictive devices. These devices can check your heart rate, oxygen level, and blood pressure. Again, the data is worthless if it is simply collected. Algorithms, sophisticated machine learning, or artificial intelligence (AI) needs to process the data in real time. It doesn’t do any good if it takes four days to get an alert about the condition of a resident who by then has already fallen.

   
   

   New, game-changing data streams are also becoming available to the industry. NORC, a social research organization at the University of Chicago, in collaboration with NIC and NIC MAP Vision, has overlayed Medicare claims data with nine-digit zip code senior living property information. This allows us to pinpoint our resident populations by health status to determine chronic disease prevalence along with average healthcare spend in a building, and the average spend per resident. That provides the opportunity through NIC MAP Vision to get a complete, and anonymous, health profile of who lives in our buildings, how they compare to individuals in the wider market area as well as who are the top healthcare providers serving residents in our buildings. This kind of data is revolutionary to understand both who is in our buildings and who is providing healthcare services to them.

   
   

   Recent research by NORC shows that residents of senior housing settings average over 12 chronic medical conditions. More than half of all senior housing residents have a mental and behavioral health diagnosis. As NIC MAP Vision adds more data to its platform over the next year, we will be able to determine the prevalence of different chronic conditions among our residents. We can quickly find out whether the population in our building has a high or low Medicare spend, or a high rate of residents being sent to the hospital. The applications and implications for the future use of this kind of data is groundbreaking and will be transformative for the industry, which brings us to the second way that data and analytics will make a big difference in our industry.

   
   
2. Data is critical for partnering, risk bearing and strategic decision-making.Healthcare data on building residents will be essential to form effective partnerships with payers and healthcare providers. Healthcare data can also be used to make strategic business decisions.
   

   Medicare Advantage plans and other healthcare dollar risk-bearers have an incentive to reduce spending, particularly among high-cost residents in assisted living, independent living and memory care. According to NORC research, senior housing residents have annual healthcare spending of about $20,000-$30,000, with residents spending $3,000-$4,000 in out-of-pocket costs. This level of spending reveals tremendous opportunity to reduce healthcare spending and improve quality of life among these residents.

   
   

   Whether by partnership with others or deciding to take on the healthcare dollar risk directly, senior living providers must have and understand this critical data about the residents in their buildings. Without it, senior living operators are at an enormous disadvantage in negotiating potential partnerships whether with Medicare Advantage plans or healthcare providers. And without this data, senior living operators are very unlikely to be rewarded for the contribution they are making to reduce the healthcare costs of their residents.

   
   

   Risk-bearing entities want to partner with operators who can provide insights into the health conditions and the healthcare spending profile of member residents. Not only is this data essential to potential partners, but the information also gives operators insight into where improvements can be made to enhance the quality of life of residents.

   
   

   Similarly, operators need data on the healthcare needs of residents to evaluate the feasibility of potential partnerships, especially in a risk-bearing arrangement. If you are in discussions to partner with a physician practice or a healthcare system, you need to understand the healthcare spending patterns of your population. Our industry has been focused on what people spend on rent and services. But we have never before had insight into what the government, and the resident themselves are paying for their healthcare. If we don’t have this data on hand, potential partners may not recognize the value we are bringing to the table. With healthcare data in hand, you can demonstrate your value to help manage healthcare spending. Senior living providers should be recognized as a partner to lower the healthcare spend and to help keep people healthy.

   
   

   As an example of how data can be used, NIC Analytics has issued a white paper and blog post that looks at the opportunities for senior living in chronic disease care. I urge you to read them. Perhaps an operator can partner with a chronic kidney disease care provider and offer on-site service in a way that is far more consumer friendly. Bear in mind, as we’ve discussed, the customer wants to get services where they live.

   
   

   New streams of data, coupled with analytics, can also improve our business strategies. How? In senior living, we’ve traditionally used data in terms of supply and demand to create market feasibility studies. How much supply is there in a particular market and what is the demand? How many people are over age 75 and what is their income? What is the prevalence of adult children and what is their income? How many buildings and units are in the markets, and what are the rental rates? But what other data might help us improve our feasibility studies? Here’s an example. NIC MAP Vision can provide the rate of Alzheimer’s disease and other dementias in the Medicare population in the top 30 largest MSAs in the country. Miami has the highest incidence at 8.3%. Portland, Oregon, has the lowest at 2.7%. This is pretty important to know if you are deciding where to locate a memory care building.

   
   

   A 2021 white paper published by NIC Analytics provides more information on dementia and how to utilize CMS Medicare data and NIC MAP Vision supply data when evaluating local conditions. Another resource is NIC’s article “Access to Capital in the Nursing Home Industry” on utilizing dementia Medicare data for more informed underwriting.

   
   
3. Data is critically important for the purpose of engagement matchmaking. Data can be used to engage residents and match them with experiences that give them a sense of purpose, belonging and connection. If we’re going to avoid the medicalization of private pay senior living, it won’t be because we have medical history data and know how to use it. Rather, it will be because we have what I call “life data” or “life values data” and know how to use it to create an engaging environment for our new customers.
   

   Senior living is very good at asking certain questions, but we overlook the most important questions. We are good at finding out the person’s need for help with the activities of daily living, or the instrumental activities of daily living such as balancing a check book. We are good at finding out how many prescriptions people take, and the over-the-counter medications they use. And we are especially good at understanding the resident’s ability to pay and for how long.

   
   

   But none of this information defines the identity of a person. In fact, every person resists being identified by those markers. We are not asking the questions that matter most to the individual and their quality of life. Most people in assisted living are moving in with us for the last two to three years of their lives. The key questions that we should be asking relate to what is most important for the person to be able to experience in the remaining time they have left. That should drive how we think about the resident, instead of coming up with a game plan based on the fact that they have 18 prescriptions, and 10 chronic conditions. What is important to the person? Maybe she wants to see her grandchild walk across the stage at college graduation. Or maybe he wants to live long enough to meet his first grandchild. We should be asking what moments in life have given you the most sense of joy? What is something new you would like to learn? What gifts, interest or talent would you like to contribute to this community? It all comes back to what matters to the residents, what’s most important to them.

   
   

   For example, Lifespark, a complete senior health company in the Twin Cities is a pioneer in whole person senior care, focused on helping people build a pathway to live their best life. Lifespark has created an Electronic Life Record (ELR) that uses artificial intelligence (AI), machine learning, and proprietary algorithms to capture not just typical medical inputs, but also thousands of additional data points that can be highly predictive for recommending not only the best care solution but also the best way to engage an older adult and enhance their experience of daily life.

   
   

   Another example: The John A. Hartford Foundation funded the Age-Friendly Health Systems initiative in partnership with the Institute for Healthcare Improvement, the American Hospital Association and the Catholic Health Association, which is now in over 2,800 care locations nationally and internationally. The goal is to help spread the reliable delivery of age-friendly care—based on the 4Ms framework (what Matters, Medication, Mentation, Mobility)—to all health care settings. The Foundation has also provided a grant to the Age-Friendly Institute, based in Boston. It operates AgeFriendly.org which features user reviews and expert advice for older adults on where to live, work and get care. The consumer reviews are akin to Yelp for care of older adults.

   
   

   So, what do we do with the life data we collect? It can be used to customize the resident experience which is how our industry will thrive in the next decade. Let’s look at several other sectors that are way ahead of us to see how they are customizing the consumer experience.

   
   

   The retail sector is a good example. My wife, Diane, was shopping online before the holiday rush for dolls for our granddaughters. But not just any dolls. Diane has very high standards for dolls and wanted unique, authentic dolls. She was checking her emails one morning and suddenly exclaimed, “How did they know?” I thought she’d been hacked until she said, “They sent me exactly what I’m looking for.” Diane had received emails from three doll manufacturers with just the kind of dolls she wanted. I said, “Diane, you have just been mass customized to have a personalized shopping experience.”

   
   

   There is a ton of data out there on us and our shopping habits. Someone put together an algorithm to find the kind of dolls that would interest Diane Kramer, who likes to holiday shop before Thanksgiving. The doll companies bought the data and knew early November was the right time to send Diane an email, so she had a super convenient shopping experience. It’s an example of how to take massive amounts of data and use it to create a customized consumer experience.

   
   

   Healthcare is another example. Heather Cox, the chief digital health and analytics officer at Humana gave a presentation at the Consumer Electronics Show (CES). She said that the next evolution of Humana would be to focus on leveraging analytics to drive new digital personalized experiences to extend care delivery to members when and how they need it. Her message: Differentiating on price isn’t the way to win on healthcare. Differentiating on experience will be.

   
   

   Humana is a huge player in the Medicare Advantage payer universe. Since Cox gave that speech Humana and United Health Group, another big payer, have been buying providers, physician practices and clinic-based settings, not expensive hospitals. Payers are seeking settings where their members can receive preventative care and assistance to manage chronic conditions to avoid the hospitals. In other words, the payer is becoming the payer and a provider, or a payvider. These big insurers are developing their own alternative care networks, and the missing piece by design is the acute care hospital.

   
   

   These examples raise a question for senior living providers. What personalized experiences that are metaphors for being alive will we offer our customer? Data and analytics will enable us and our partners not only to practice true preventative healthcare but most importantly to design opportunities for our residents to have the experiences they want most in the last years of their lives. This is a completely different approach from the activities director who runs herself ragged to schedule lots of activities to appeal to everyone. Or the activities director who takes a one-size-fits all approach and hopes people show up.

   
   

   We can’t create customized experiences if its up to the staff to figure out what each individual wants and then deliver a solution. That’s where a number of new companies are focusing on how to customize the experience to engage residents.

   
   

   Sentrics has developed an integrated suite of platforms to customize the resident experience from what she watches on television to specific activities. Continual feedback from the resident helps to tailor the experience.

   
   

   Connected Living is another example. At the center of the Connected Living ecosystem is an enterprise content management system with links to programs and services.

   
   

   Again, if we are going to be a place that people are attracted to rather than one to avoid, the key will be to provide personalized or customized experiences. But to do this, we have to be able to collect data and use it quickly to personalize preventative healthcare and also to engage our residents. Rather than being a place to disappear, we will be settings that are metaphors for being alive. It’s true that our customer may have chronic conditions and may only be given three years to live by the doctor. But she wants to feel alive and have experiences that are meaningful to her.

   
   

   This will be a challenge for senior living that has grown accustomed to marketing care to meet needs. But the reality is that people want to feel alive, and we have to figure out what makes them feel alive. We must reframe the aging experience and engage our customers. The smart use of data and analytics will help us meet that challenge.

Next up: Key Driver # 6: Moving from Siloed to Seamless. We will see a shift from the current fragmented, single-point healthcare solutions and technology applications to integrated longitudinal solutions that are setting, disease, and payer agnostic.

With wage inflation and continued labor market challenges and shortages, skilled nursing operators and owners face steep competition relative to other industries (i.e., indirectly from other service industries such as hotels and restaurants) especially those operating in regions and states where broad labor availability is tight and employer demand is high. Additionally, amid generally low occupancy levels, skilled nursing owners and operators face challenges over the long term with new and proposed staffing mandates and requirements. 

The greatest shortages of healthcare staff continue to be among essential workers such as nursing staff and aides, the backbone of the skilled nursing sector. This blog post explores underlying staffing shortages data among nursing staff and aides in the skilled nursing industry from three perspectives: location (region), property-level occupancy, and the size of the property. Further, it examines how the ongoing staffing crisis affects skilled nursing properties based on these three measures and includes an interactive dashboard to explore the varying combinations of these measures on resulting levels of properties’ staff shortages.

As background, according to the latest Bureau of Labor Statistics (BLS) data, the seasonally adjusted number of employees at skilled nursing properties increased to 1,361,000 in September 2022, up 18,300 jobs from its pandemic low of 1,342,700 in March 2022. Despite these recent job gains, employment in skilled nursing is still 220,200 jobs below pre-pandemic March 2020 levels (1,581,200), equivalent to negative 13.9%, and 312,600 jobs below its peak of 1,673,600 in September 2011, equivalent to negative 18.7%

Staffing shortages likely hit their peak earlier this year in January 2022 and started to ease since. Notably, the share of skilled nursing properties reporting shortages of nursing staff dropped from 28.0% in January 2022 to 20.8% in September 2022, and the share of skilled nursing properties reporting shortages of aides dropped from 29.7% to 21.6% over the same period, according to the Nursing Home COVID-19 Public File (CMS data as of September 18, 2022, compiled by NIC Analytics).

By Region. As Exhibit 1 below shows, no region has been spared the scarcity of nursing staff and aides. However, staffing shortages in the Midwest have been acute. About 37% of skilled nursing properties in the Midwest reported shortages of nursing staff, and nearly 40% reported shortages of aides back in January 2022, the highest levels recorded since the onset of the pandemic, across all U.S. regions. 

By mid-September 2022, as staffing shortages slightly eased, about 30% of skilled nursing properties in the Midwest reported shortages of nursing staff and aides, nearly twice that of the South, Northeast, and West regions.

By Occupancy. The pandemic stretched finances for many skilled nursing operators, and the relatively slow pace of occupancy recovery is an additional challenge. Just like the employment trends, occupancy for skilled nursing properties is recovering but remains far below pre-pandemic levels. The relationship between labor and occupancy and conversely for occupancy and labor is synergistic and a bit of a chicken and egg scenario. In some instances, if labor isn’t available, new patients cannot be admitted, but if patients cannot be admitted, occupancy cannot be improved. The key question is what are the potential solutions to break this challenging cycle and help skilled nursing properties be competitive in attracting staff, improving occupancy, and providing the best and needed care for patients?

Exhibit 2 below shows that the higher the occupancy, the lower the share of skilled nursing properties reporting shortages of nursing staff and aides. Notably, skilled nursing properties with an occupancy rate below 80% had, and continue to have, the highest proportion of properties indicating a shortage in nursing staff and aides. By comparison, skilled nursing properties within higher occupancy cohorts have been reporting relatively lower shares of properties experiencing shortages of nursing staff and aides.

By Property Size. Another way to look at this data is by property size or total units. Interestingly, the highest share of skilled nursing properties reporting staffing shortages has been among small properties (less than 50 units). Exhibit 3 below illustrates that small properties tend to have a higher share reporting shortages of nursing staff and aides, and vice versa. In general, the smaller the property, the more volatile the occupancy due to the impact of just a few moveouts. This may impact staffing as well across these smaller properties, especially if they are not part of a larger portfolio.

Taking just these three variables into account — property location, occupancy, and size — staffing shortages vary substantially. For example, finding and hiring staff can be more challenging for small properties (less than 50 units) in the Midwest, with an occupancy rate less than 80%. In fact, the interactive dashboard below tracks closely these measures and indicates that about 40% of skilled nursing properties within this group reported shortages of nursing staff and aides for the week ending September 25, 2022, the highest share of any other combination of these three measures. 

Conversely, less than 5% of relatively larger skilled nursing properties (100+ units) in the West, with an occupancy rate of 90% or more, reported shortages of nursing staff and aides, the lowest share of any other combination of these three measures. 

To monitor these staffing shortage measures at the state and county levels over time, visit NIC’s Skilled Nursing COVID-19 Tracker.

The U.S. Bureau of Labor Statistics reported that nonfarm payrolls rose by 263,000 in September 2022 and the unemployment rate fell back to its July level of 3.5%. The September increase was well below the year-to-date average of 420,000 and below the monthly average of 562,000 seen in 2021. The monthly gain paints an image of a still growing, but slowing, job market. Revisions added 11,000 positions to total payrolls in the previous two months.

Employment in health care rose by 60,000 in September and has now returned to its February 2020 level. Employment in nursing care facilities was up by 14,300 jobs from year-earlier levels and stood at 1,361,000.

In a separate survey conducted by the BLS, the jobless rate slipped back to 3.5% for September, down from 3.7% in August. The jobless rate is once again equal to its pre-pandemic level of 3.5% seen in February 2020, and well below the 14.7% peak seen in April 2020. At 3.5%, the jobless rate matches its 50-year low seen before the pandemic. Among the major worker groups, the September unemployment rates were 3.4% for adult women, adult men (3.3%), teenagers (11.0%), Whites (3.1%), Blacks (5.8%), and Asians (2.5%).

Average hourly earnings for all employees on private nonfarm payrolls rose by $0.10 in September to $32.46. This was a gain of 5.0% from year-earlier levels, still high, but lower than in August (5.2%). Notably, on a three-month annualized basis, wages rose by a slower pace of 4.4%.

The labor force participation rate slipped back to 62.3% in September from 62.4% in August and was below the February 2020 level of 63.4%.

Earlier this week, the BLS released its JOLTS report that showed the number of job openings fell 10% in August to a seasonally adjusted 10.1 million from 11.2 million in July. That left job openings at their lowest level in one year, but still well above their pre-pandemic level in 2019 when they averaged 7.2 million

These combined reports support the Federal Reserve’s intention of continuing to raise interest rates further following the 75-basis point hike in the federal funds rate in late September. Already, the Fed has increased interest rates five times this year to a current target range of 3% to 3.25%, its highest range since early 2008. Another two rate hikes are anticipated for 2022. Further, a majority of the Federal Open Market Committee (FOMC) members see the fed funds rate reaching a level of between 4.5% and 5.0% in 2023.